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TMI Blog2022 (12) TMI 585X X X X Extracts X X X X X X X X Extracts X X X X ..... ey situation, CBDT issued Circular No.286/2/2003 prohibiting the departmental officials from taking confession in the search. The board is of the view that often the officials used to obtain confessions from the assessee and stop further recovery of the material. Such confessions have been retracted and then the addition could not withstand the scrutiny of the higher appellate authority, because no material was found, supporting such addition. Keeping the provisions of section 132(4) in justaposition with provisions of Explanation 5A to Section 271(1) (c), the inference of ownership of any money, bullion, jewellery or other valuable articles, to our mind, ought not be based merely on the joint disclosure petition - When the assessee has taken specific plea that no money, bullion or jewellery or income based on any entries in any books of account or other documents for these two assessment years was found during the course of search, AO ought to have immediately referred the documents, entries or any asset found, which is relevant to these assessment years in the penalty proceedings. He should have rejected the explanation of the assessee by demonstrating it as incorrect. R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been issued by the Hon ble Court and have been extended from time to time and if the COVID period is being excluded keeping in view the Hon ble Supreme Court s order, then there is no substantial delay in filing the appeals on the part of the assessee. Therefore, we condone the delay and proceed to decide the appeals on merit. 3. In both the appeals, the assessee has challenged the imposition of penalty of Rs.33,609/- in A.Y. 2007-08 and Rs.1,35,315/- in A.Y. 2011-12. Since common grounds are involved in both the years, we take up the matter for A.Y. 2007-08 to discuss the facts and merits of the case, which will apply mutat is mutandis for appeal relating to A.Y. 2011- 12 also. 4. Brief facts of the case are that assessee filed his original return of income on 31.10.2007 reporting total income of Rs.92,066/-. A search and seizure operation under section 132 of the Act was conducted on 18.02.2013, which included the residence of the assessee also. Subsequently, notice under section 153A of the Act was issued on 08.05.2014, which was served upon the assessee, asking for filing the return of total income. In response to notice under section 153A of the Act, assessee filed hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seized material exhibiting the unearth of money, bullion, diamonds or any other asset, would suggest that the alleged undisclosed income would not fall within the ambit of concealed income provided in Explanation-5A appended with section 271(1)(c) of the Act. On the other hand, the case of the department is, that had the additional income been disclosed voluntarily in response to the notice under section 153A, then, why such income was not disclosed in the original return filed by the assessees prior to the search ? The disclosure of additional income is result of search as made out in the joint disclosure petition dated 16.04.2013. Therefore, the alleged additional income assessed in the hands of the assessee is deemed to be a concealed income for the purpose of visiting him with penalty under section 271(1)(c) r.w.s Explanation-5A of the Act. 8. Explanation 5A to Section 271(1)(c) is reproduced as under:- Explanation 5A.- Where, in the course of a search initiated under section 132 on or after the 1st day of June, 2007, the assessee is found to be the owner of- (i) any money, bullion, jewellery or other valuable article or thing (hereafter in this Explanation referre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee disclosed some additional income voluntarily, would he be deemed to have concealed the income for visiting him with penalty under section 271(1)(c) of the Act ? The moot question for attracting this explanation is that in the course of search, money, bullion, jewellery or income based on any entry in the books of accounts or other documents ought to have been found. The ld.Revenue authorities had drawn inference that since the assessee has not disclosed additional income in the original returns, meaning thereby, it is to be assumed that he has disclosed this amount only when some incriminating material was found. To our mind this assumption ought to be supported with reference of that specific incriminating material. Let us see the finding in the assessment order. In paras 4.1 to 4.3 of the said assessment order, the ld. AO has noted as under:- 4.1. As per the disclosure petition dated 16.04.2013, the assessee disclosed Rs.50,000/- as income from Brokerage Commission for the F,Y, 2006-07 relevant to the A.Y. 2007-08. 4.2 It is seen from the return that the assessee has disclosed the amount in the return of income under the head of income from other sources there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ption of facts, then, solely on the basis of such admission, no addition is required to be made. It is true that admission being declaration against an interest are good evidence, but they are not conclusive, and a party is always at liberty to withdraw the admission by demonstrating that they are either mistaken or untrue. In law, the retracted confession even may form the legal basis of admission, if the AO is satisfied that it was true and was voluntarily made. But then basing the addition on a retracted declaration solely would not be safe. It is not a strict rule of law, but only a matter of prudence. As a general rule, it is unsafe to rely upon a retracted confession without corroborative evidence. Due to this grey situation, CBDT issued Circular No.286/2/2003 prohibiting the departmental officials from taking confession in the search. The board is of the view that often the officials used to obtain confessions from the assessee and stop further recovery of the material. Such confessions have been retracted and then the addition could not withstand the scrutiny of the higher appellate authority, because no material was found, supporting such addition. 14. Thus, keeping the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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